Overtaxed but underserved: Reforming the Philippines’ tax system to open up investment
At the 2026 Economic of Doing Business (EODB) Briefing held at the Asian Development Bank (ADB), one message struck a chord:
The Philippines is overtaxed, but not efficient.
The phrase, highlighted during the presentation of global tax policy expert and Asian Consulting Group (ACG) Chief Tax Advisor Mon Abrea, reflects a growing feeling among taxpayers and investors – that although Filipinos face multiple layers of taxes, compliance with laws and the quality of public services remain below expectations.
More importantly, it points to a deeper issue:
The problem is not just how much we charge, but how the system is designed and managed.
Watch his presentation here:
Organized by the Anti-Red Tape Authority (ARTA) in collaboration with the Asian Developmet Bank (ADB), the forum brought together key government officials, including representatives from the Department of Finance (DoF), the Bureau of Internal Revenue (BIR), and the Bureau of Customs (BoC), to promote financial compliance, transparency, and smooth government processes.
The event was attended by members of embassies, foreign trade bodies, industry leaders and policy makers – demonstrating strong public-private partnerships in improving the country’s business environment.
A Program That Carries Growth
The Philippines continues to face governance and competitiveness challenges. With a Corruption Perceptions Index (CPI) score of 32/100, investor confidence remains subdued, while businesses face:
- Complex and overlapping tax laws
- High compliance costs
- Regular audits and discretionary enforcement
- Delay in VAT refund and approval
The result is a system that is heavy on compliance, but light on efficiency and service delivery.
This imbalance deters investment, weakens voluntary compliance, and ultimately limits income opportunities.
Tax Relief: The Missing Piece
Although the reforms have improved the ease of doing business, the ease of paying taxes remains a significant obstacle.
Globally competitive economies focus not only on tax rates but also on predictability, transparency, and efficiency. Countries like Singapore, Vietnam, and Indonesia have invested heavily in digitalization and facilitation programs to attract investors.
In the Philippines, improving competitiveness requires up-to-date tax administration – not just reforming tax policy.
From Red Tape to Red Carpet
At the EODB forum, government leaders emphasized that ease of doing business is about building trust – between government, taxpayers, and investors.
Transforming the Philippines into an investment destination requires moving from red tape to the red carpet.
This means reducing complexity, streamlining processes, and making compliance easier and more predictable.
Agenda for Competitive Reforms
A comprehensive reform agenda was launched to align the Philippines with global standards:
- AI-driven, risk-based audits to target tax avoidance instead of burdening MSMEs
- Adoption of the OECD Global Minimum Tax to capture eligible income from various businesses
- Reducing VAT from 12% to 10%, while strengthening the enforcement of base expansion
- Increasing tax exemptions to provide relief to workers
- Elevating bank secrecy for tax purposes to improve transparency
- Imposing tax on undisclosed wealth to curb corruption
At the institutional level, further structural changes are proposed:
Creation of a National Revenue Authority, which integrates taxation and taxation systems to improve efficiency, data sharing, and accountability.
Taking the Conversation Global
These changes are part of a broader effort to position the Philippines as a competitive investment destination.
On Feb. 26, 2026, Asian Consulting Group (ACG) will present the 2026 International Tax and Investment Roadshow, covering key cities across Asia, the Middle East, Europe, North America and Australia.
Alongside this book is presented:
WHY INVEST IN THE PHILIPPINES? – CREATE MULTIPLE PROGRAMS
A practical guide for global investors, featuring insights from business executives, ambassadors, and industry leaders.
The Way Forward
The Philippines has strong economic foundations – but unlocking its full potential requires restoring trust in its institutions.
Tax reform is not just about raising revenue.
It is about creating a system that is fair, efficient, and predictable.
Because in today’s global economy, countries don’t compete on taxes alone.
They compete for trust.
And until taxpayers feel they are being served the way they are taxed, the Philippines will remain overtaxed – but underserved.
To invite Mr. Area for discussions or information, e-mail [email protected].
Mon Abrea is a tax policy expert and is the founder and senior tax consultant of the Asian Consulting Group, which advises governments, multinational firms, and investors on tax reform and investment strategy. He has degrees and advanced training from Harvard University, Duke University, and the University of Oxford.
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